Rates jump to cover payouts

March 7, 2013

COLUMBIANA - A recent jump in electric rates in January was in part the result of the city's payout to former manager Keith Chamberlin and service director Jay Groner in January.

Finance Director Mike Harold told council on Tuesday the city paid roughly a combined $40,000 to the former employees for their accumulated sick and vacation pay.

The men decided to retire after more than two decades of service on Dec. 31, before changes to the Ohio Public Employee Retirement System took effect.

That the payout affected electric rates for city customers was pointed out by Councilman Bryan Blakeman, who posed the question to Harold during the meeting.

Harold explained the payout was split between the water, sewer and electric funds.

"Jay's salary always came out of those three. Most of Keith's salary came out of electric, and water and sewer and some other funds," he said.

The city's electric rates are set by the city manager on a monthly basis and fluctuate based on the city's monthly cost for power and other expenses.

The payout caused some strain on the funds considering it was nearly half of Chamberlin's annual salary, he noted after the meeting.

Chamberlin was making $86,000 a year when he retired.

Blakeman said, as he has before, that paying the salaries out of the funds is "taxation without representation."

He made the same statement in late February of 2012 during a council discussion regarding the transfer of electric fund money to the general fund to cover expenses.

Council had approved an ordinance that allowed for the transfer, although any money taken would be paid back with interest.

At that time Blakeman argued paying salaries out of the electric fund and not the general fund was taxation without representation since electric rates are a source of revenue for the fund.

Mayor Dave Spatholt and then-planning commission chairman Richard McBane explained at that time Chamberlin's salary was paid out of the fund because he spends time working in that department.

"Why did we have to pay them such a large sum of money?" Councilman James King asked on Tuesday.

Harold said it was likely that because they knew they would be retiring they didn't take vacations earlier in the year. While there is no maximum cap on accumulated vacation, eligible employees can only carryover so much each year.

"You have to use that carryover by the end of June," he said.

Sick time is capped at 240 hours.

Harold said the electric fund has been decreasing over time and was at $1.4 million at the end of 2012.

The fund was expected to remain at or just above $1.8 million all that year, according to the 2012 budget. The fund is used for maintenance and upgrading of the electrical system and was at $2.9 million in September of 2010.

Since then the city has spent about $900,000 on upgrading the north substation.

Harold said the increase in rates for customers this January was also the result of the contract ending with American Municipal Power in December.

"That was a pretty good contract as far as price-wise. That will have to be made up by either paying electricity on the market or some other projects we are in," he said.